Houston-based Eagle Rock Energy Partners LP agreed to pay $236 million to acquire privately held Millennium Midstream Partners LP (MMP), a natural gas gathering and processing business whose operations are based in Texas.
MMP, based in The Woodlands, TX, a Houston suburb, is backed by Kayne Anderson Energy Development Co., Tortoise Capital Resources Corp., WFC Holdings Corp. (an affiliate of Wells Fargo Bank NA) and an entity controlled by the partnership’s original founders, all of which would receive Eagle Rock units as partial consideration.
The largest of MMP’s gathering systems is in East Texas, with more than 260 miles of gathering pipelines in Polk, Angelina, Nacogdoches, Cherokee, Rusk and Smith counties. MMP’s Central Texas system has more than 235 miles of gathering pipelines in Grimes, Waller, Harris, Washington and Austin counties. Its West Texas system is spread across more than 100 miles of gathering pipes in Crockett County.
The East Texas assets are near to and connect with Eagle Rock’s Indian Springs and Camp Ruby assets, the partnership noted. Together the assets in East Texas would encompass 1,114 miles of gathering and processing assets, Eagle Rock stated.
Of the purchase price, $181 million is to be paid in cash, and the remainder would be covered by issuance of Eagle Rock common units to the sellers at an implied value of $13.75/unit. The transaction is to close in October pending financial conditions. Eagle Rock is assessing the impact that Hurricane Ike may have had on MMP’s facilities and the coverage afforded under its existing commercial property and business interruption insurance.
MMP’s gas processing business is carried out through its 16.25% nonoperating ownership interests in the Yscloskey Processing Plant in St. Bernard Parish, LA, and its 7.75% interest in the North Terrebonne Processing Plant in Terrebonne Parish, LA. It also has established processing agreements with the Bluewater, Eunice, Sabine, Patterson and Pelican plants, all located in southern Louisiana.
Eagle Rock will host a conference call to discuss the transaction at 9 a.m. CDT on Wednesday, which may be accessed through its website at www.eaglerockenergy.com. The call-in number is (888) 713-4218, confirmation code 95883356.
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